Talos Energy (TALO) Update - July 19

[dan_s]

This morning TALO was trading at $15.31. My current valuation is $23.50.

TipRanks: "In the last 3 months, 3 ranked analysts set 12-month price targets for TALO. The average price target among the analysts is $22.00. The two most recent price target updates submitted to TipRanks are from Stifel Nicolaus and Benchmark. They both have price targets set at $23.00."

Talos recently sold half of their stake in the Zama Project offshore Mexico. Cash proceeds from that sale shore up their balance sheet.

Based on my forecast, Talos should be able to fund all of their 2023 D&C Capex with operating cash flow. There is nothing in my valuation for Zama or their CCS business.

Talos' production should be up ~9,000 Boepd (mostly oil) from Q1 to Q2 thanks to the EnVen Energy Acquisition that close 2-13-2023.

Talos does have hurricane risk each year, so I lower my production forecast by 10% from Q2 to Q3 each year.